Business area Industry

Business area Industry is a complete supplier of the products and services needed to carry out a sustainable and cost-efficient construction and civil engineering project on the Swedish, Norwegian and Finnish markets. Industry offers everything from gravel and rock material, concrete, asphalting and temporary electricity to prefabricated concrete elements. Business area Industry also assists with crane rental, import and distribution of binder to the concrete industry, machines and transportation as well as recycles production waste.

Business area Industry is run in six product areas: Asphalt, Concrete, Gravel and Rock, Transportation and Machines, Rentals and Construction System. All the product areas operate on the Nordic construction and civil engineering market.

Net sales and profit

October – December 2019

Net sales for the fourth quarter 2019 decreased by six percent and amounted to SEK 3,592 million (3,803). The decrease in net sales is mainly related to Asphalt, where there was very high activity during the fourth quarter of 2018.

Operating profit for the fourth quarter 2019 amounted to SEK 363 million (401) and the operating margin was 10.1 percent (10.5).

During the fourth quarter the remaining 40 percent of the shares in AB Smidmek Eslöv were acquired. The price of the remaining shares has been based on the company’s development and earning capability and since company development has been better than expected the price of the remaining shares was higher. Since Peab has chosen the anticipated acquisition accounting method the effect of the acquisition has been recognized in the income statement, which affected operating profit by SEK -47 million.

January – December 2019

Net sales for 2019 amounted to SEK 13,339 million (13,284). Even adjusted for acquisitions and divestures net sales was unchanged compared to last year. Net sales increased in all product areas except Construction System where net sales fell.

Operating profit for the year amounted to SEK 938 million (977) and the operating margin was 7.0 percent (7.4). The lower operating margin was due to higher costs in Rentals stemming from some supplemental establishments made to raise local presence that have not yet begun to generate their full revenue capacity. In addition, the business area has been charged in the third quarter with acquisition costs of SEK 40 million concerning YIT’s paving and mineral aggregates operations and the acquisition of the remaining 40 percent of the shares in AB Smidmek Eslöv of SEK 47 million in the fourth quarter.

Capital employed in Industry was at the end of the year SEK 6,897 million compared to SEK 6,432 million at the end of last year. The increase is primarily attributable to investments in machinery. The effect of additional IFRS 16, Leases was SEK 98 million per December 31, 2019.

Orders received and order backlog

October – December 2019

Orders received during the fourth quarter amounted to SEK 1,803 million (1,549).

January – December 2019

Orders received during 2019 amounted to SEK 6,174 million (5,111). The increase is primarily related to Asphalt. Order backlog on December 31, 2019 amounted to SEK 2,548 million (2,246).